Monday, October 29, 2012

Nearly 1.3 Million Homeowner Assistance Actions Taken through Making Home Affordable

More than 1 million homeowners have received a permanent modification through the Home Affordable Modification Program (HAMP). These homeowners have reduced their first lien mortgage payments by a median of approximately $539 each month – more than one-third of their median before-modification payment – saving a total estimated $15 billion to date in monthly mortgage payments.

Nearly 94,000 second lien modifications have been completed through the Second Lien Modification Program (2MP), and over 71,000 homeowners have exited their homes through a short sale or deed-in-lieu of foreclosure with assistance from the Home Affordable Alternatives Program (HAFA).

87% of eligible homeowners entering a HAMP trial modification since June 1, 2010 have received a permanent modification with an average trial period of 3.5 months.

Homeowners currently in HAMP permanent modifications with some form of principal reduction have been granted an estimated $7.2 billion in principal reduction. 81% of eligible non-GSE borrowers entering HAMP in August have received some form of principal reduction with their modification.

If you think you may qualify for a  Home Affordable Modification Program or the Hardest Hit fund, improve your chances of getting approved by letting an experienced housing counselor assist you. The service is free. You will never pay a dime for letting a HUD-approved housing counselor help you resolve your housing need. For assistance in middle Tennessee call Rod Williams 615-850-3453.

Thursday, October 25, 2012

Hardest HIt in other states

 If you do not live in Tennessee and want to know if Hardest Hit is available in your state, follow this link.

The Hardest Hit Fund is Available to Help Homeowners in 18 States and the District of Columbia

N.C. Foreclosure Prevention Fund Caseworkers

Paul O. and his wife outside their home in North Carolina.

Reposted from US Treasury
By: Mark McArdle

Struggling with mortgage payments and facing the prospect of foreclosure can be overwhelming and frightening for homeowners. In 2010, the Obama Administration launched the Hardest Hit Fund to help homeowners avoid foreclosure in the areas hardest hit by steep home price declines and unemployment. Through the program, participating housing finance agencies (HFAs) in 18 states and the District of Columbia are implementing a variety of different initiatives to help homeowners struggling with their mortgage payments. All participating HFAs are now operating programs widely and offering assistance to homeowners.
The North Carolina program—the N.C. Foreclosure Prevention Fund—pays an unemployed worker’s mortgage for up to 24 months (up to $24,000) while they are enrolled in an educational or training program or are searching for a new job. In high-unemployment counties, the cap is 36 months. The funds are provided as a zero-interest loan to the homeowner, which does not have to be repaid if the homeowner continues to live in their home for 10 years. The loan can also be used by homeowners who are seeking employment because of a financial hardship such as a divorce, or who have become re-employed but need to bring their mortgage current because they fell behind during a recent period of unemployment.

Paul O. has experienced the benefit of the Hardest Hit Fund first hand. After 17 years as a shipping and warehouse supervisor for an electronics manufacturer in Winston-Salem, he was laid off in February 2010. While disappointed, Paul had peace of mind on the day he was laid off. Paul says that was because of the information he had received from the Governor’s Workforce Rapid Response Team about the N.C. Foreclosure Prevention Fund.
The Rapid Response Team offers early intervention for workers like Paul who are affected by layoffs or closures throughout North Carolina. Led by the N.C. Department of Commerce and local workforce development professionals, with funding from the U.S. Department of Labor, a Rapid Response team meets with companies planning layoffs or closures and their employees on short notice and in confidentiality. The N.C. Housing Finance Agency’s outreach teams have participated in nine rapid response deployments within the past year, providing resources and information to over 4,000 displaced workers who may be eligible for assistance. Partnerships like these allow the state to target outreach directly to individuals who are likely to be eligible for assistance.
Paul says that what he learned about the N.C. Foreclosure Prevention Fund during his Rapid Response meeting last November gave him his greatest comfort—knowing that a program was available to help him keep his home during the transition. He left that meeting with a notebook full of materials that gave him a sense of direction and hope. One of the pages he dog-eared instantly was the flier for the N.C. Foreclosure Prevention Fund.
“We don’t want homeowners to wait until they’re in foreclosure to use our loans,” said Betsy Rozakis, the Housing Finance Agency’s CFO and director of the N.C. Foreclosure Prevention Fund. “Our goal is to provide help before they’re in foreclosure, and before they have depleted their retirement savings or ruined their credit.”
Paul is now enrolled at Forsyth Community College to get an advanced certification in shipping and warehouse management that will help him become more competitive in a job market he has not had to venture into in over 17 years. Paul believes this has only been possible because of the N.C. Foreclosure Prevention Fund. The N.C. Housing Finance Agency will use loan funds to pay his mortgage and homeowner’s association dues through June 2013, while he finishes his education and seeks re-employment.
Hardest Hit Fund programs vary state to state, but may include the following:
  • Mortgage payment assistance for unemployed or underemployed homeowners
  • Principal reduction to help homeowners get into more affordable mortgages
  • Funding to eliminate homeowners’ second lien loans
  • Help for homeowners who are transitioning out of their homes and into more affordable places of residence.
Homeowners in participating states can apply for the Hardest Hit Fund through 2017, or until all program funds are allocated for homeowner assistance. For more information about the program in your state, contact your HFA directly.

Tuesday, October 23, 2012

Making Home Affordable Plans Nashville Event to Help Struggling Tennessee Homeowners Keep their Homes

Reposted from Treasury Notes
By: Andrea Risotto,10/19/2012

Are you a Tennessee homeowner struggling with your mortgage payments?  Would you like to understand the options available to you based on your particular circumstances?  Do you need help working with your mortgage company to apply for assistance?  If so, then we encourage you to attend the free Helpfor Homeowners Community Event at the Nashville Convention Center on Wednesday, October 24. 
At next week’s event, which is co-sponsored with the HOPE NOW Alliance, homeowners in the Nashville area will be able to meet face-to-face with 15 of the nation’s largest mortgage servicers to discuss options to make their mortgage payments more affordable. Every homeowner who attends will leave with a clearer idea of their eligibility for help and next steps.
We encourage you to attend even if you have tried unsuccessfully to work with your mortgage company in the past, particularly if you have had a change in circumstances.  Local HUD-approved housing counselors will be on-site to meet with homeowners and offer free guidance. And there are more options for assistance available today than ever before, including new opportunities for mortgage modifications, refinances and unemployment assistance.  
One of the newer programs available to homeowners in the Volunteer State is Keep My Tennessee Home.  Funded by Treasury’s HardestHit Fund, Keep My Tennessee Home offers assistance to homeowners struggling to keep up with their mortgage payments due to unemployment or a reduction in wages. This program makes payments to a homeowner’s mortgage company for up to 18 months while he or she looks for work. 
Far too often, struggling families in Tennessee and across the country tell us they were unaware of their options or too scared to reach out.  But remember that—every month—hundreds of additional Tennessee families are getting help to make their mortgage payments more affordable.  Keep My Tennessee Home is an example of one such program where agencies across the state are working together to help homeowners.
As the administrator of Keep My Tennessee Home, the Tennessee Housing Development Authority (THDA), told us, “We recently attended an outreach event in a community southeast of Nashville.  Toward the end of the evening, an adult couple timidly approached us and subsequently thanked us for helping them keep their home.  This couple was accompanied by their teenage son and daughter.  When their son realized who we were, he stuck out his hand and, shaking vigorously, thanked us very sincerely for helping his family stay in their home. All it takes is one experience like this to remind us of what this program is all about.”
Since 2009, the U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) have sponsored 77 free outreach events for struggling homeowners across the country.  Additional events are already planned for 2012 in Orlando,Florida and Ontario,California.  More information about these events and other free resources for homeowners is available on (end)

You can skip this outreach event and call me and I will screen you over the phone and if you qualify I will serve you.  You will save a lot of your time.  I am a HUD-approved housing counselor. There is no cost for our services.
Rod Williams 615-850-3453

Thursday, October 18, 2012



Wednesday, October 24, 2012 | 1:00 p.m. – 8:00 p.m. ET
Nashville Convention Center
Center Exhibit Hall
601Commerce Street, Nashville, TN 37203
Learn about the Making Home Affordable Programs

You can skip this event and come directly to me and I will evaluate you for all of the work-out options. If you are not eligible, I will tell you.  If you are eligible or potentially eligible I will tell you how to improve your chances of getting a workout. I can help you assemble  your work-out package. If you are eligible for the Hardest Hit program, I will serve as your counselor and process your application. There is no charge for our service.

Rod Williams
Senior Housing Counselor
Woodbine Community Organization
222 Oriel Ave., Nashville, TN 37210

Work phone #: 615-850-3453
FAX: 615-833-9727
web site:

Tuesday, September 25, 2012

you may be eligible for a payment under the National Mortgage Settlement

If you lost your home to a foreclosure between January 1, 2008, and December 31, 2011 and your loan was serviced by Ally/GMAC, Bank of America, Citi, JP Morgan Chase, or Wells Fargo, you may be eligible for a payment under this settlement. Details about the eligibility requirements and the benefits are available at the national mortgage settlement website.

On September 17, 2012, the Tennessee Attorney General's Office and the National Mortgage Settlement Administrator will be sending a postcard to the last known address of eligible Tennessee consumers. This postcard, which can be viewed here, gives you notice that a claim form will be sent to you in the next month. The deadline to return the claim form is January 18, 2013.

If you did not receive a postcard or claim form but believe you should be eligible, please contact the National Mortgage Settlement Administrator at by telephone at 866-430-8358 (hearing impaired call 866-494-8281), Monday through Friday 7:00 a.m. – 7:00 p.m. Central Time or by email at You can also find out more information about this foreclosure payment program by visiting the national mortgage settlement website. This claim form process is free, and you should not pay anyone to help you submit your claim form. If you have any questions about the claim form, please contact the National Mortgage Settlement Administrator. (link)

National Mortgage Settlement

Tennessee, along with 48 other Attorneys General and several federal agencies, reached an agreement with the nation's five largest servicers: Bank of America, Chase, Citi, GMAC/Ally Financial, and Wells Fargo. This national mortgage settlement provides relief to eligible homeowners such as loan modifications, refinance, forbearance, and short sales.

The settlement also sets out new servicing standards for the servicers to implement to improve communications with these servicers. For instance, the servicers must provide homeowners seeking loan modification assistance with a single point of contact regarding their situations. For more information about the settlement, please visit the national mortgage settlement website.

Wednesday, April 11, 2012

HUD Secretary Donovan: housing counseling works.
As every member of the HUD family knows, over the last three years we've come a long way in pushing back against the foreclosure crisis.

Foreclosure notices have been cut in half since President Obama took office - and nearly 6 million families have received mortgage modifications that have helped them stay in their homes.
I'm proud of the progress we've been able to make so far for those families. And I know that it would not have been possible without the dedication and expertise of housing counselors we fund in communities across the country.

Over the last three years, HUD-approved housing counselors have assisted 8 million families - one reason last month, the Obama Administration honored our nation's housing counselors in Los Angeles as part of the White House Champions of Change initiative.

And the results these men and women have achieved is undeniable. Indeed, a recent study found that 9-in-10 families who received foreclosure counseling from HUD-approved counselors continued to live in their homes 18 months later.

As impressive as those results are, we shouldn't be surprised. Distressed homeowners are nearly twice as likely to receive a modification on their mortgage if they are working with a housing counselor. And as the Urban Institute recently demonstrated, borrowers in foreclosure were 70 percent more likely to get up to date on payments if they received counseling.

Quite simply, housing counseling works.

With our extraordinary record of success, like many of you, I was disappointed when Congress eliminated funding for HUD's housing counseling grants in Fiscal Year 2011. But we didn't sit on our hands - instead, we built a case that HUD-funded housing counseling is a critical tool in our work to not only fight foreclosures, but support the recovery of our housing market more broadly.

Indeed, while the National Foreclosure Mitigation Counseling funds administered by our partners at NeighborWorks America are essential to our ability to assist homeowners in acute distress, HUD funds support the entire range of counseling and training necessary to ensure people make good, responsible choices that work for families in their communities - whether it's buying or renting, improving financial literacy, protecting families' rights against discrimination, or even preventing homelessness.

That's the case we made to Congress - and because we did, last month HUD was able to announce more than $42 million in housing counseling grants to 468 organizations in communities across the country that prevent foreclosures and help families find decent housing.

I'm proud we were able to partially restore our housing counseling funding. But I'm even prouder that we were able to cut the time it took to get these funds on the street by nearly 70 percent compared to 2010. And I expect that progress to continue once Congress approves our plan to establish the Office of Housing Counseling within HUD.

Even still, we know the housing market is still fragile, and that homeowners need all the help they can get. That's why the $2.6 billion provided to states as part of the recent $25 billion mortgage servicing settlement with the five largest servicers is so important. These dollars can be used for foreclosure prevention efforts that include housing counseling - and already, we've seen state attorneys general from both parties commit to using these funds to help homeowners. Indeed, while needs and requirements vary from state to state, at meetings with stakeholders and attorneys general around the country, I am encouraging our state attorneys general to direct settlement funds towards helping homeowners.
At a time when our economy is growing and our housing market is showing signs of strength, we know there is no better way of accelerating that progress than speeding help to homeowners. That's what housing counseling is about - and ensuring it helps as many families as possible, in as many communities as possible, is our shared challenge in the months ahead.

Call me. I can help you save your home. No charge for my services. 
Rod Williams
Senior Housing Counselor
Woodbine Community Organization
Work phone #: 615-850-3453
FAX: 615-833-9727
web site:

Hardest Hit Fund saves home of Phyllis Qualls-Brooks

by Marcus Washington, News Channel 5

NASHVILLE, Tenn. - In a huge settlement against major banks, Tennessee stands to get $141 million  to help save thousands of homes from foreclosure.

Phyllis Qualls-Brooks walks the path many Tennesseans have traveled in this rocky economic downturn.
"Because of budget cuts my position was eliminated," said Qualls-Brooks.

Without a job she could not pay her mortgage, so she turned to a program she heard about through the Tennessee Housing Development Agency, THDA, called the "Hardest Hit Fund."
"I finished the application process; I was approved. That day was a wonderful day in my life," said Qualls-Brooks. (link)

I was Phyllis Qualls-Brooks housing counselor and helped her get qualified for the Hardest Hit Fund. Call me, I may be able to help you. There is no charge for my service.

Rod Williams
Senior Housing Counselor
Woodbine Community Organization
Work phone #: 615-850-3453
FAX: 615-833-9727
web site:

Tuesday, February 14, 2012

Most TN homebuyers won't get a share of mortgage settlement

While Tennessee consumers stand to get about $146 million from a $25 billion settlement announced Thursday between the government and the nation’s top five mortgage-loan servicers, the benefits at street level may be limited.

Restrictions on the payouts will leave out almost all but the biggest loans on the fanciest houses, critics say.
Loans that are owned by the two government-controlled mortgage giants — known as Fannie Mae and Freddie Mac — are not covered by the the biggest portions of the agreement, the Tennessee Attorney General’s Office confirmed.

“That excludes the majority of mortgages in Tennessee,” said Jeff Hill, senior counsel in the Consumer Protection Division of the attorney general’s office.

Two main provisions of the national deal — allowing some homeowners to get loan modifications to lower their mortgages if they owe more than the property is worth or to refinance at lower rates — apply only to mortgages not backed by Fannie Mae or Freddie Mac. Mortgage professionals say most loans that remain covered are so-called jumbo loans or mortgages of at least $417,000 typically used in Middle Tennessee for homes in high-end neighborhoods.(link)

What is the Full Story about Helen Bailey's Pending Foreclosure?

Occupy Nashville has come to the assistance of 78-year-old Helen Bailey trying to prevent Chase Bank from foreclosing on her home. The story has gained national attention. Over 40,000 people have signed an on-line petition protesting the pending foreclosure including notable civil rights activist Cornel West.

This is a sad story. No one wants to see a 78 year old women be put out on the streets. However, before we jump to the conclusion that Chase should just write off $9000 in debt and let Ms Bailey stay in her home, pause and think about this situation.

What is the full story? 
The newspaper article says Ms Bailey has lived in the home for 28 years. There are some details that may not be relevant, but they very well may be. I don’t think we are getting the full story. There were two recent quit claim deeds filed on the property where other parties gave up an ownership interest in the property. I would be curious why there were two quit claims filed on the property. One quit claim was from Meriel Bailey dated 5/9/2011. The original warranty deed dated April 1999 transferred the property to Kimberly F. Bailey, Helen Bailey, and Meriel Fulton. Also the newspaper says her two daughters recently moved out of the property. Were the parties giving a quit claim her daughters? Did someone give up their ownership interest in the property so Ms Bailey could qualify for a reverse mortgage? Is Ms Bailey the only person on her mortgage? If other parties are on the mortgage they are still responsible for this debt. When one gives up an ownership interest in a property, they do not escape their obligation to pay the debt. I don’t know the facts. I am only asking questions but I think these questions need to be asked. (For property information see here and here.) 

Can Chase forgive $9000?
Ms Bailey is trying to get a reverse mortgage and the reverse mortgage is $9,000 short of the amount needed to pay off the existing mortgage. Occupy is asking Chase to take a short pay-off of $9000. While I do not know that Chase cannot do that, it may very well be that they cannot. Mortgage companies often cannot just write off a debt. When a mortgage company makes a loan, the loan is bundled and sold with similar type loans. The investor in these securitised debt instruments could be Fannie Mae or Freddie Mac or any of about 4000 other investors. Chase is no longer the owner of the debt. The debt instruments which secure the bundled mortgages often contain language that prohibits writing down any of the principle. So even if Chase wanted to write off $9000 they may be prohibited from doing so.

If Chase could write down the debt would it be good policy?
If Chase does a write off of debt for one person so they may get a reverse mortgage then others will have a similar expectation. What is the limit on how much debt a mortgage company should write off in order to accommodate someone in getting a reverse mortgage? Believe me, people will figure out how to make the system work for them. If it becomes Chase policy to write down debt in order for a party to get a reverse mortgage one may see situations in which people purposely modify their circumstances in order to qualify for such a write down. Wives may quit claim their interest in the property to their husband in order to let an older husband get a reverse mortgage and then they may expect the mortgage company to just forgive any shortage necessary to get the reverse mortgage. All of this money that is being written off is someone's money.  Part of it may be the tax payers money and contribute to the $14 trillion deficit.  If you own a share in a mutual fund in an IRA, you may experience a loss in your retirement account when an investor writes off a debt. There are consequences to debt forgiveness programs.

If Chase does write down the debt, can indeed Ms. Bailey get a Reverse Mortgage?
Reverse mortgages are not as automatic as they once were. Reverse mortgage companies have been having a problem with borrowers who would get a reverse mortgage and then still not be able to keep up the home, keep it insured, and pay the taxes. The newspaper story says Ms Bailey only has $700 a month income. In considering Ms. Bailey for a reverse mortgage, the reverse mortgage company would have to be assured that she is financially able to provide for home upkeep, taxes and insurance and still have money to live. I am not so sure she can qualify for a reverse mortgage. Does she have a conditional approval from a reverse mortgage lender?

Why did the daughters abandon their mother?
The Tennessean report says, “She fell behind on her mortgage in April after her two daughters moved out, leaving her with a mortgage just under $1,000 to pay alone.” Why did her two daughters move out? If everything was OK prior to the two daughters moving out, do the two daughters not have the obligation to help their mother? Are either or both of the daughters on the mortgage note? Can the two daughters raise the $9000 shortage? Are the two daughters not more responsible for their mother’s well-being than Chase? What is the story?

Is keeping this home in Ms Bailey’s best interest?
The newspaper story says, “She receives less than $700 a month in Social Security.” Think about that. Even if Chase writes off the $9000 and Ms Bailey is able to get a reverse mortgage, can she stay in her house on $700 a month? The home is a 4-bedroom, three-bath, 2720 square foot house. That is a lot of house to heat and maintain.  If she is only $9000 short on getting a reverse mortgage then my best wild guess is that she owes about $128,000 on the home and it is worth about $176,000. (See value estimates click here.) It is probably in Ms Bailey’s best interest to sell the home and downsize.

Why not let Occupy pay the $9000 shortage?
If 40,000 people think Chase should forgive the $9000 in order for Ms Bailey to stay in her home, then do the math: $9000/40,000= 22.5 cents each. If each of the 40,000 people who signed the petition would send Ms Bailey a quarter her problem would be solved. Maybe Cornel West could send a dollar.

Thursday, February 9, 2012

New Help for Homeowners

Tennessee is participating in a joint state-federal mortgage servicing agreement with the nation’s five largest mortgage servicers: Bank of America, Chase, Citi, GMAC/Ally Financial, and Wells Fargo.

A servicer is the company to which the borrower makes his monthly mortgage payment. Borrowers should contact their servicer directly to see if they are eligible for relief under the settlement.
  • Bank of America: 877-488-7814 
  • J.P. Morgan Chase: 866-372-6901 
  • Citi: 866-272-4749 
  • GMAC/Ally Financial: 800-766-4622 
  • Wells Fargo: 800-288-3212 

Tennessee borrowers who are having problems with their mortgages regardless of their servicer are encouraged to contact a free foreclosure prevention counselor for assistance. For a list of counselors or more information about housing assistance programs, please go to or you may call me directly, Rod Williams 615-850-3453

More information about this new mortgage servicing agreement will be posted as it becomes available.

Friday, February 3, 2012

Obama’s Plan to Help Homeowners

Below is a press release from the White House explaining a new plan the President proposes to deal with the foreclosure crisis. At this time it is unknown if this plan will be enacted into law or not, nor how many people may benefit by this plan if it is enacted. As soon as anyone know, I will know. However, don't wait for a new plan. If you need help, call me now. There are various options to help those facing foreclosure. One of the best programs is "Keep My Tennessee Home," also known as "The Hardest Hit Fund." Call me now to see if you qualify. There is no charge for my services. I am an employee of a HUD-approved non-profit Housing Counseling Agency.  Rod Williams 615-850-3453 (Tennessee Residents only, please.) Rod

The White House, Office of the Press Secretary

In his State of the Union address, President Obama laid out a Blueprint for an America Built to Last, calling for action to help responsible borrowers and support a housing market recovery. While the government cannot fix the housing market on its own, the President believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference, including allowing these homeowners to save thousands of dollars by refinancing at today’s low interest rates. That’s why the President is putting forward a plan that uses the broad range of tools to help homeowners, supporting middle-class families and the economy.
Key Aspects of the President’s Plan
• Broad Based Refinancing to Help Responsible Borrowers Save an Average of $3,000 per Year: The President’s plan will provide borrowers who are current on their payments with an opportunity to refinance and take advantage of historically low interest rates, cutting through the red tape that prevents these borrowers from saving hundreds of dollars a month and thousands of dollars a year. This plan, which is paid for by a financial fee so that it does not add a dime to the deficit, will:
Provide access to refinancing for all non-GSE borrowers who are current on their payments and meet a set of simple criteria.
Streamline the refinancing process for all GSE borrowers who are current on their loans.
Give borrowers the chance to rebuild equity through refinancing.
• Homeowner Bill of Rights: The President is putting forward a single set of standards to make sure borrowers and lenders play by the same rules, including:
Access to a simple mortgage disclosure form, so borrowers understand the loans they are taking out.
Full disclosure of fees and penalties.
Guidelines to prevent conflicts of interest that end up hurting homeowners.
Support to keep responsible families in their homes and out of foreclosure.
Protection for families against inappropriate foreclosure, including right of appeal.
• First Pilot Sale to Transition Foreclosed Property into Rental Housing to Help Stabilize Neighborhoods and Improve Home Prices: The FHFA, in conjunction with Treasury and HUD, is announcing a pilot sale of foreclosed properties to be transitioned into rental housing.
• Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work: Following the Administration’s lead, major banks and the GSEs are now providing up to 12 months of forbearance to unemployed borrowers.
• Pursuing a Joint Investigation into Mortgage Origination and Servicing Abuses: This effort marshals new resources to investigate misconduct that contributed to the financial crisis under the leadership of federal and state co-chairs.
• Rehabilitating Neighborhoods and Reducing Foreclosures: In addition to the steps outlined above, the Administration is expanding eligibility for HAMP to reduce additional foreclosures, increasing incentives for modifications that help borrowers rebuild equity, and is proposing to put people back to work rehabilitating neighborhoods through Project Rebuild.
1. Broad Based Refinancing Plan
Millions of homeowners who are current on their mortgages and could benefit from today’s low interest rates face substantial barriers to refinancing through no fault of their own. Sometimes homeowners with good credit and clean payment histories are rejected because their mortgages are underwater. In other cases, they are rejected because the banks are worried that they will be left taking losses, even where Fannie Mae or Freddie Mac insure these new mortgages.  In the end, these responsible homeowners are stuck paying higher interest rates, costing them thousands of dollars a year.
To address this challenge, the President worked with housing regulators this fall to take action without Congress to make millions of Americans eligible for lower interest rates. However, there are still millions of responsible Americans who continue to face steep barriers to low-cost, streamlined refinancing. So the President is now calling on Congress to open up opportunities to refinancing for responsible borrowers who are current on their payments.
Under the proposal, borrowers with loans insured by Fannie Mae or Freddie Mac (i.e. GSE-insured loans) will have access to streamlined refinancing through the GSEs. Borrowers with standard non-GSE loans will have access to refinancing through a new program run through the FHA. For responsible borrowers, there will be no more barriers and no more excuses.
Key components of the President’s plan include:
• Providing Non-GSE Borrowers Access to Simple, Low-Cost Refinancing: President Obama is calling on Congress to pass legislation to establish a streamlined refinancing program. The refinancing program will be open to all non-GSE borrowers with standard (non-jumbo) loans who have been keeping up with their mortgage payments. The program will be operated through the FHA.
Simple and straightforward eligibility criteria: Any borrower with a loan that is not currently guaranteed by the GSEs can qualify if they meet the following criteria:
• They are current on their mortgage: Borrowers will need to have been current on their loan for the past 6 months and have missed no more than one payment in the 6 months prior.
• They meet a minimum credit score. Borrowers must have a current FICO score of 580 to be eligible. Approximately 9 in 10 borrowers have a credit score adequate to meet that requirement.
• They have a loan that is no larger than the current FHA conforming loan limits in their area: Currently, FHA limits vary geographically with the median area home price – set at $271,050 in lowest cost areas and as high as $729,750 in the highest cost areas
• The loan they are refinancing is for a single family, owner-occupied principal residence.  This will ensure that the program is focused on responsible homeowners trying to stay in their homes.
Streamlined application process: Borrowers will apply through a streamlined process designed to make it simpler and less expensive for borrowers and lenders to refinance. Borrowers will not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, a lender need only confirm that the borrower is employed. (Those who are not employed may still be eligible if they meet the other requirements and present limited credit risk. However, a lender will need to perform a full underwriting of these borrowers to determine whether they are a good fit for the program.)
Program parameters to reduce program cost: The President’s plan includes additional steps to reduce program costs, including:
• Establishing loan-to-value limits for these loans. The Administration will work with Congress to establish risk-mitigation measures which could include requiring lenders interested in refinancing deeply underwater loans (e.g. greater than 140 LTV) to write down the balance of these loans before they qualify. This would reduce the risk associated with the program and relieve the strain of negative equity on the borrower.
• Creating a separate fund for new streamlined refinancing program. This will help the FHA better track and manage the risk involved and ensure that it has no effect on the operation of the existing Mutual Mortgage Insurance (MMI) fund.
EXAMPLE: How Refinancing Can Benefit a Borrower With a Non-GSE Loan
 A borrower has a non-GSE mortgage originated in 2005 with a 6 percent rate and an initial balance of $300,000 – resulting in monthly payments of about $1,800.
 The outstanding balance is now about $272,000 and the borrower’s home is now worth $225,000, leaving the borrower underwater (with a loan-to-value ratio of about 120%).
 Though the borrower has been paying his mortgage on time, he cannot refinance at today’s historically low rates.
 Under the President’s legislative plan, the borrower would be eligible to refinance into a 4.25% percent 30-year loan, which would reduce monthly payments by about $460 a month.
• Refinancing Plan Will Be Fully Paid For By a Portion of Fee on Largest Financial Institutions: The Administration estimates the cost of its refinancing plan will be in the range of $5 to $10 billion, depending on exact parameters and take-up. This cost will be fully offset by using a portion of the President’s proposed Financial Crisis Responsibility Fee, which imposes a fee on the largest financial institutions based on their size and the riskiness of their activities – ensuring that the program does not add a dime to the deficit.
• Fully Streamlining Refinancing for All GSE Borrowers: The Administration has worked with the FHFA to streamline the GSEs’ refinancing program for all responsible, current GSE borrowers. The FHFA has made important progress to-date, including eliminating the restriction on allowing deeply underwater borrowers to access refinancing, lowering fees associated with refinancing, and making it easier to access refinancing with lower closing costs.
To build on this progress, the Administration is calling on Congress to enact additional changes that will benefit homeowners and save taxpayers money by reducing the number of defaults on GSE loans. We believe these steps are within the existing authority of the FHFA. However, to date, the GSEs have not acted, so the Administration is calling on Congress to do what is in the taxpayer’s interest, by:
a. Eliminating appraisal costs for all borrowers: Borrowers who happen to live in communities without a significant number of recent home sales often have to get a manual appraisal to determine whether they are eligible for refinancing into a GSE guaranteed loan, even under the HARP program. Under the Administration’s proposal, the GSEs would be directed to use mark-to-market accounting or other alternatives to manual appraisals for any loans for which the loan-to-value cannot be determined with the GSE’s Automated Valuation Model. This will eliminate a significant barrier that will reduce cost and time for borrowers and lenders alike.
b. Increasing competition so borrowers get the best possible deal: Today, lenders looking to compete with the current servicer of a borrower’s loan for that borrower’s refinancing business continue to face barriers to participating in HARP. This lack of competition means higher prices and less favorable terms for the borrower. The President’s legislative plan would direct the GSEs to require the same streamlined underwriting for new servicers as they do for current servicers, leveling the playing field and unlocking competition between banks for borrowers’ business.
c. Extending streamlined refinancing for all GSE borrowers: The President’s plan would extend these steps to streamline refinancing for homeowners to all GSE borrowers. Those who have significant equity in their home – and thus present less credit risk – should benefit fully from all streamlining, including lower fees and fewer barriers. This will allow more borrowers to take advantage of a program that provides streamlined, low-cost access to today’s low interest rates – and make it easier and more automatic for servicers to market and promote this program for all GSE borrowers.
• Giving Borrowers the Chance to Rebuild Equity in their Homes Through Refinancing: All underwater borrowers who decide to participate in either HARP or the refinancing program through the FHA outlined above will have a choice: they can take the benefit of the reduced interest rate in the form of lower monthly payments, or they can apply that savings to rebuilding equity in their homes. The latter course, when combined with a shorter loan term of 20 years, will give the majority of underwater borrowers the chance to get back above water within five years, or less.
To encourage borrowers to make the decision to rebuild equity in their homes, we are proposing that the legislation provide for the GSEs and FHA to cover the closing costs of borrowers who chose this option – a benefit averaging about $3,000 per homeowner. To be eligible, a participant in either program must agree to refinance into a loan with a no more than 20 year term with monthly payments roughly equal to those they make under their current loan. For those who agree to these terms, the lender will receive payment for all closing costs directly from the GSEs or the FHA, depending on the entity involved.
EXAMPLE: How Rebuilding Equity Can Benefit a Borrower
 A borrower has a 6.5 percent $214,000 30-year mortgage originated in 2006. It now has an outstanding balance of $200,000, but the house is worth $160,000 (a loan-to-value ratio of 125). The monthly payment on this mortgage is $1,350.
 While this borrower is responsibly paying her monthly mortgage, she is locked out of refinancing.
 By refinancing into a 4.25 percent 30-year mortgage loan, this borrower will reduce her monthly payment by $370. However, after five years her mortgage balance will remain at $182,000.
 Under the rebuilding equity program, the borrower would refinance into a 20-year mortgage at 3.75 percent and commit her monthly savings to paying down principal. After five years, her mortgage balance would decline to $152,000, bringing the borrower above water.
 If the borrower took this option, the GSEs or FHA would also cover her closing costs – potentially saving her about $3,000.
• Streamlined Refinancing for Rural America: The Agriculture Department, which supports mortgage financing for thousands of rural families a year, is taking steps to further streamline its USDA-to-USDA refinancing program. This program is designed to provide those who currently have loans insured by the Department of Agriculture with a low-cost, streamlined process for refinancing into today’s low rates. The Administration is announcing that the Agriculture Department will further streamline this program by eliminating the requirement for a new appraisal, a new credit report and other documentation normally required in a refinancing. To be eligible, a borrower need only demonstrate that he or she has been current on their loan.
• Streamlined Refinancing for FHA Borrowers:  Like the Agriculture Department, the Federal Housing Authority is taking steps to make it easier for borrowers with loans insured by their agency to obtain access to low-cost, streamlined refinancing.  The current FHA-to-FHA streamlined refinance program allows FHA borrowers who are current on their mortgage to refinance into a new FHA-insured loan at today’s lower interest rates without requiring a full re-underwrite of the loan, thereby providing a simple way for borrowers to reduce their mortgage payments.
However, some borrowers who would be eligible for low-cost refinancing through this program are being denied by lenders reticent to make loans that may compromise their status as FHA-approved lenders. To resolve this issue, the FHA is removing these loans from their “Compare Ratio”, the process by which the performance of these lenders is reviewed. This will open the program up to many more families with FHA-insured loans.
2. Homeowner Bill of Rights
The Administration believes that the mortgage servicing system is badly broken and would benefit from a single set of strong federal standards   As we have learned over the past few years, the nation is not well served by the inconsistent patchwork of standards in place today, which fails to provide the needed support for both homeowners and investors. The Administration believes that there should be one set of rules that borrowers and lenders alike can follow. A fair set of rules will allow lenders to be transparent about options and allow borrowers to meet their responsibilities to understand the terms of their commitments.
The Administration will therefore work closely with regulators, Congress and stakeholders to create a more robust and comprehensive set of rules that better serves borrowers, investors, and the overall housing market. These rules will be driven by the following set of core principles:
• Simple, Easy to Understand Mortgage Forms: Every prospective homeowner should have access to clear, straightforward forms that help inform rather than confuse them when making what is for most families their most consequential financial purchase. To help fulfill this objective, the Consumer Financial Protection Bureau (CFPB) is in the process of developing a simple mortgage disclosure form to be used in all home loans, replacing overlapping and complex forms that include hidden clauses and opaque terms that families cannot understand.
• No Hidden Fees and Penalties: Servicers must disclose to homeowners all known fees and penalties in a timely manner and in understandable language, with any changes disclosed before they go into effect.
• No Conflicts of Interest: Servicers and investors must implement standards that minimize conflicts of interest and facilitate coordination and communication, including those between multiple investors and junior lien holders, such that loss mitigation efforts are not hindered for borrowers.
• Assistance For At-Risk Homeowners:
Early Intervention: Servicers must make reasonable efforts to contact every homeowner who has either demonstrated hardship or fallen delinquent and provide them with a comprehensive set of options to help them avoid foreclosure. Every such homeowner must be given a reasonable time to apply for a modification.
Continuity of Contact: Servicers must provide all homeowners who have requested assistance or fallen delinquent on their mortgage with access to a customer service employee with 1) a complete record of previous communications with that homeowner; 2) access to all documentation and payments submitted by the homeowner; and 3) access to personnel with decision-making authority on loss mitigation options.
Time and Options to Avoid Foreclosure: Servicers must not initiate a foreclosure action unless they are unable to establish contact with the homeowner after reasonable efforts, or the homeowner has shown a clear inability or lack of interest in pursuing alternatives to foreclosure. Any foreclosure action already under way must stop prior to sale once the servicer has received the required documentation and cannot be restarted unless and until the homeowner fails to complete an application for a modification within a reasonable period, their application for a modification has been denied or the homeowner fails to comply with the terms of the modification received.
• Safeguards Against Inappropriate Foreclosure
Right of Appeal: Servicers must explain to all homeowners any decision to take action based on a failure by the homeowner to meet their payment obligations and provide a reasonable opportunity to appeal that decision in a formal review process.
Certification of Proper Process: Prior to a foreclosure sale, servicers must certify in writing to the foreclosure attorney or trustee that appropriate loss mitigation alternatives have been considered and that proceeding to foreclosure sale is consistent with applicable law. A copy of this certification must be provided to the borrower.
The agencies of the executive branch with oversight or other authority over servicing practices –the FHA, the USDA, the VA, and Treasury, through the HAMP program – will each take the steps needed in the coming months to implement rules for their programs that are consistent with these standards.
3. Announcement of Initial Pilot Sale in Initiative to Transition Real Estate Owned (REO) Property to Rental Housing to Stabilize Neighborhoods and Improve Housing Prices
When there are vacant and foreclosed homes in neighborhoods, it undermines home prices and stalls the housing recovery. As part of the Administration’s effort to help lay the foundation for a stronger housing recovery, the Department of Treasury and HUD have been working with the FHFA on a strategy to transition REO properties into rental housing. Repurposing foreclosed and vacant homes will reduce the inventory of unsold homes, help stabilize housing prices, support neighborhoods, and provide sustainable rental housing for American families.
Today, the FHFA is announcing the first major pilot sale of foreclosed properties into rental housing. This marks the first of a series of steps that the FHFA and the Administration will take to develop a smart national program to help manage REO properties, easing the pressure of these distressed properties on communities and the housing market.
4. Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work
Last summer, the Administration announced that it was extending the minimum forbearance period that unemployed borrowers in FHA and HAMP would receive on their mortgages to a full year, up from four months in FHA and three months in HAMP. This forbearance period allows borrowers to stay in their homes while they look for jobs, which gives these families a better chance of avoiding default and helps the housing market by reducing the number of foreclosures. Extending this period makes good economic sense as the time it takes the average unemployed American to find work has grown through the course of the housing crisis: nearly 60 percent of unemployed Americans are now out of work for more than four months.
These extensions went into effect for HAMP and the FHA in October. Today the Administration is announcing that the market has followed our lead, finally giving millions of families the time needed to find work before going into default.
• 12-Month Forbearance for Mortgages Owned by the GSEs: Fannie Mae and Freddie Mac have both announced that lenders servicing their loans can provide up to a year of forbearance for unemployed borrowers, up from 3 months. Between them, Fannie and Freddie cover nearly half of the market, so this alone will extend the relief available for a considerable portion of the nation’s unemployed homeowners.
• Move by Major Servicers to Use 12-Month Forbearance as Default Approach: Key servicers have also followed the Administration’s lead in extending forbearance for the unemployed to a year. Wells Fargo and Bank of America, two of the nation’s largest lenders, have begun to offer this longer period to customers whose loans they hold on their own books, recognizing that it is not just helpful for these struggling families, but it makes good economic sense for their lenders as well.
• A New Industry Norm: With these steps, the industry is gradually moving to a norm of providing 12 months of forbearance for those looking for work. This is a significant shift worthy of note, as only a few months ago unemployed borrowers simply were not being given a fighting chance to find work before being faced with the added burden of a monthly mortgage payment.
5. Joint Investigation into Mortgage Origination and Servicing Abuses
The Department of Justice, the Department of Housing and Urban Development, the Securities and Exchange Commission and state Attorneys General have formed a Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force that will be responsible for investigating misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The Department of Justice has announced that this working group will consist of at least 55 DOJ attorneys, analysts, agents and investigators from around the country, joining existing state and federal resources investigating similar misconduct under those authorities.
The working group will be co-chaired by senior officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ. The working group will also be co-chaired by New York Attorney General Schneiderman, who will lead the effort from the state level.  Other state Attorneys General have been and will be joining this effort.
6. Putting People Back to Work Rehabilitating Homes, Businesses and Communities Through Project Rebuild
Consistent with a proposal he first put forward in the American Jobs Act, the President will propose in his Budget to invest $15 billion in a national effort to put construction workers on the job rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses. Building on proven approaches to stabilizing neighborhoods with high concentrations of foreclosures – including those piloted through the Neighborhood Stabilization Program – Project Rebuild will bring in expertise and capital from the private sector, focus on commercial and residential property improvements, and expand innovative property solutions like land banks.
In addition, the Budget will provide $1 billion in mandatory funding in 2013 for the Housing Trust Fund to finance the development, rehabilitation and preservation of affordable housing for extremely low income families. These approaches will not only create construction jobs but will help reduce blight and crime and stabilize housing prices in areas hardest hit by the housing crisis.
7. Expanding HAMP Eligibility to Reduce Additional Foreclosures and Help Stabilize Neighborhoods
To date, the Home Affordable Mortgage Program (HAMP) has helped more than 900,000 families permanently modify their loans, providing them with savings of about $500 a month on average. Combined with measures taken by the FHA and private sector modifications, public and private efforts have helped more than 4.6 million Americans get mortgage aid to prevent avoidable foreclosures. Along with extending the HAMP program by one year to December 31, 2013, the Administration is expanding the eligibility for the program so that it reaches a broader pool of distressed borrowers. Additional borrowers will now have an opportunity to receive modification assistance that provides the same homeowner protections and clear rules for servicers established by HAMP. This includes:
• Ensuring that Borrowers Struggling to Make Ends Meet Because of Debt Beyond Their Mortgage Can Participate in the Program: To date, if a borrower’s first-lien mortgage debt-to-income ratio is below 31% they are ineligible for a HAMP modification. Yet many homeowners who have an affordable first mortgage payment – below that 31% threshold – still struggle beneath the weight of other debt such as second liens and medical bills. Therefore, we are expanding the program to those who struggle with this secondary debt by offering an alternative evaluation opportunity with more flexible debt-to-income criteria.
• Preventing Additional Foreclosures to Support Renters and Stabilize Communities: We will also expand eligibility to include properties that are currently occupied by a tenant or which the borrower intends to rent. This will provide critical relief to both renters and those who rent their homes, while further stabilizing communities from the blight of vacant and foreclosed properties. Single-family homes are an important source of affordable rental housing, and foreclosure of non-owner occupied homes has disproportionate negative effects on low-and moderate-income renters.
8. Increasing Incentives for Modifications that Help Borrowers Rebuild Equity
Currently, HAMP includes an option for servicers to provide homeowners with a modification that includes a write-down of the borrower’s principal balance when a borrower owes significantly more on their mortgage than their home is worth. These principal reduction modifications help both reduce a borrower’s monthly payment and rebuild equity in their homes. While not appropriate in all circumstances, principal reduction modifications are an important tool in the overall effort to help homeowners achieve affordable and sustainable mortgages. To further encourage investors to consider or expand use of principal reduction modifications, the Administration will:
Triple the Incentives Provided to Encourage the Reduction of Principal for Underwater Borrowers: To date, the owner of a loan that qualifies for HAMP receives between 6 and 21 cents on the dollar to write down principal on that loan, depending on the degree of change in the loan-to-value ratio. To increase the amount of principal that is written down, Treasury will triple those incentives, paying from 18 to 63 cents on the dollar.
Offer Principal Reduction Incentives for Loans Insured or Owned by the GSEs: HAMP borrowers who have loans owned or guaranteed by Fannie Mae or Freddie Mac do not currently benefit from principal reduction loan modifications. To encourage the GSEs to offer this assistance to its underwater borrowers, Treasury has notified the GSE’s regulator, FHFA, that it will pay principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to forgive principal in conjunction with a HAMP modification.